Govt to invest 723 cr for HMT's revival

The revival package, which was cleared by the CCEA, involves Rs 443 crore as preference share capital, reports Gaurav Choudhury.

The government on Thursday decided to inject Rs 723 crore through a mix of instruments including preference shares, equity share capital and loan for reviving the ailing HMT Machine Tools Limited by forming a joint venture.

The revival package, which was cleared by the cabinet committee on economic affairs (CCEA), involves Rs 443 crore as preference share capital, Rs 180 crore as equity share capital and a special non-plan loan for funding the voluntary retirement scheme (VRS).

"The joint venture partner will be identified as early as possible", Finance Minister P Chidambaram told reporters after the cabinet meeting. "The details of the joint venture are yet to be worked out", he said.

"With the restructuring of the company, its balance sheet including the debt equity ration will improve," said Chidambaram.

He, however, made it to clear that there was no "proposal for outright sell or privatisation of HMT".

He said the issue of negative net worth of the company would be addressed through repayment of long term loans and discharge of old liabilities.

As a result of the Voluntary Retirement Scheme, the wage bill of the company would be reduced and profit margins improved.

The restructuring will also result into reduction of the accumulated losses while critical manufacturing facilities will be upgraded.